Bandhan Bank tanks 20% as RBI bars it from opening new branches

The stock locked in lower circuit of 20% at Rs 451, its lowest level since its listing on March 27, 2018, on the BSE.

Shares of Bandhan Bank are locked in lower circuit of 20% at Rs 451 per share on the BSE following Reserve Bank of India’s (RBI's) decision to stop the private sector lender from opening new branches and freezing the remuneration of its managing director & chief executive officer (MD & CEO) Chandra Shekhar Ghosh.

The stock was trading at its lowest level since its listing on March 27, 2018. It has fallen 39% from its all-time high level of Rs 741 touched on August 9, 2018, on the BSE in intra-day trade.

The trading volumes on the counter more than doubled with a combined 3.79 million shares changed hands on the NSE and BSE till 09:30 am. There were pending sell orders for 3.57 million shares on both the exchanges so far.

“The RBI has communicated to us that since the Bank was not able to bring down the shareholding of Non Operative Financial Holding Company (NOFHC) to 40% as required under the licensing condition, general permission to open new branches stands withdrawn and the Bank can open branches with prior approval of RBI,” Bandhan Bank on Friday said in a regulatory filing.
 

It also said that remuneration of the bank's MD & CEO, Chandra Shekhar Ghosh, stood frozen at the existing level until further notice.

The Bank is taking necessary steps to comply with the licensing condition to bring down the shareholding of NOFHC in the Bank to 40% and shall continue to engage with RBI in this behalf, it added.

The bank's majority stake is owned by Bandhan Financial Holdings Ltd, a so-called non-banking financial company (NBFC) that does not take deposits. Bandhan Financial Holdings has an 82.28% stake in the bank.